- Ponz Pandikuthira, chief planning officer of Nissan Americas, sees strong momentum as it refreshes its portfolio
- Nissan has redesigned profitable QX80 and Armada, sees good demand for entry Kicks
- “There’s no way we’re going to run out of cash in 12 months,” Pandikuthira said
The headlines suggest Nissan is in trouble. Cutting 9,000 jobs, slashing 20% of global production, questioning how much longer the Japanese brand can last.
Despite all this, Ponz Pandikuthira, the chief planning officer of Nissan Americas, finds plenty to be optimistic about as Nissan regroups yet again.
“I see a very strong recovery,” Pandikuthira told Motor Authority during a phone call last month.
If proven correct, it wouldn’t be the first time Nissan emerged from dire straits. In 1999, the scrappy Japanese company once known for sports cars and innovative engineering, avoided bankruptcy by joining the Renault-Nissan alliance helmed by incoming CEO and subsequent cause célèbre Carlos Ghosn. The businessman cut costs and slashed jobs en route to a record 8% market share in the U.S.—and unusual celebrity fame.
Then he was arrested for financial misdeed in 2018, fled Japan in a music-equipment box in 2019 to his home country of Lebanon, where he could not be extradited to Japan or France for his alleged crimes. Nissan has been in a tailspin of sensationalism ever since.
Change is coming at Nissan, however, and its manifest in the brand’s latest products. Our call took place in a mobile boardroom, inside the posh 2025 Infiniti QX80 full-size SUV, redesigned for the first time in about 15 years.
Pandikuthira had been called away during the drive program of the redesigned 2025 Nissan Armada three-row full-size SUV and 2025 Nissan Murano midsize SUV. It was mid-December, outside of Nissan’s North American headquarters in Franklin, Tenn., a few days before a bombshell announcement that Honda and Nissan were escalating talks of a merger to be finalized by 2026.
A lot more is planned for the Americas, which together makes up about 30% of global Nissan sales and is the most profitable region for the brand, accounting for “the lion’s share” of profit, Pandikuthira said.
In our Q&A, Pandikuthira debunked some of the negative news and cast light on what’s coming for a storied brand that’s now more than 110 years old, including its origins as Datsun.
Ponz Pandikuthira, chief planning officer of Nissan Americas
What are Nissan’s strengths right now?
Pandikuthira: “I’ve been in the automotive industry for 28 years and it’s so cyclical. The performance of a company—if it’s a snapshot of one instance of time—it’s not representative. An active plan that’s in place for the future, a three-year operational plan for which we’re deploying capital right now is a more accurate picture of the business.
“We’ve got four new cars this year, we replaced the Murano which has 1.1 million units sold (lifetime, global since 2003 model year, primarily in North America) in a niche segment Nissan defined. We’re replacing two of the most per unit profitable vehicles worldwide in the QX80 and Armada (Patrol). And we’ve replaced our entry level vehicles—the access point into the brand for the region—the Kicks, which is now the fastest turning product we’ve had in our recent past. Customer demand is very good, they spend very little time on lots.
“That’s very strong momentum for where we are. And where we’re headed is to continue to replenish this platform and the portfolio, compensating for some of the shortfalls we have now. We’re going to be adding a PHEV by the end of 2025. We’ve reinvested in deploying the next-generation Rogue that will come with hybrid, PHEV, and affordable ICE (internal combustion engine) powertrains—that will be a solid over-200,000-unit program. And we’re coming out with four different EVs.
“As for the timeline, I can’t comment on specifics right now but they’re actively being worked on. We’re not betting on all-electric for our entire platform—the market has spoken—it will be a combination of ICE, partially electrified hybrids, PHEVs, and we will have EVs.”
Ponz Pandikuthira, chief planning officer of Nissan Americas
Where do you see Nissan needs work? More specifically, is Nissan fully past the Carlos Ghosn era?
“Let’s talk first about the Carlos Ghosn question because it’s a critical one. Under normal circumstances it would take about two years to clean up the aftermath of that reputational impact. But, unfortunately, for several different reasons not worth delving into at this point, we’ve had about two to three rounds of major management level changes. (Current Nissan CEO Makoto Uchida took over in late 2019, after Hiroto Saikawa was ousted in less than two years.)
“That instability has delayed the recovery. When I say delay the recovery it’s not in terms of what needed to be cleaned up fiscally and legally but from a strategic decision-making standpoint. Each level of senior management has a certain vision for how the portfolio should look, where we should invest, where we should move, and if that changes in two rounds that’s what’s slowed us down from reacting much more quickly to do the stuff we need to do in the market.
“I do believe now we are in a position of stability.
“Coming to your second question of what Nissan really needs to focus on. I think we have a superb portfolio coming. We do have cost challenges which are actually related to scale. The Renault-Nissan alliance had a lot of platform synergies with huge cost advantages. And the discussions we’ve had with Honda (and there’s lots of very intense discussion going on right now) to see how that partnership with Honda can deliver software defined vehicles, efficient EVs in the future, battery technologies, powertrains, I think that will address some of the cost challenges we currently have.”
Ponz Pandikuthira, chief planning officer of Nissan Americas
Job cuts, production cuts, long-term survival—what would you say to those sensational headlines or to speculation on Nissan’s future? What is really going on?
“Those are very fair questions and I’m going to answer them directly. And I want to address them one at a time. If there’s dodging around it’s because people are nervous to speak out and I think that makes it worse.”
The first one about the 9,000 jobs:
“Why 9,000 jobs? You’ve seen our global footprint and the number of employees we have. We were a company selling 5.9 million cars at a peak (from peak year of 2017 when we were shooting for 8% market share Ghosn target. It’s been a relatively steady downslide since the scandal broke) and now we’re down to 3.5 million cars. It probably shouldn’t have been that steep, I do not think this is a 3.5-million-unit company but when you delay key decisions…This business has a two- to three-year development cycle to get new product to market and so every year or two years you lose in decision-making the upside in profitability that those products would have generated also get delayed.
“When you’re selling that many fewer vehicles, it’s just general fiscal responsibility that says you’ve got a cost footprint that doesn’t match the revenue footprint. So this is a fundamental rightsizing of the business. It has nothing to do with gloom and doom, it has nothing to do with desperation. It’s just fiscal responsibility that any for-profit company has to do.
“The way we’re going about the 9,000-job reduction is planned and I think it’s done in a very humane way. We’ve had a voluntary separation plan here in the U.S. We’re not just brutally axing jobs and people are well aware of it. We have contingency plans. That’s normal rightsizing of the business.
“I do see a very strong recovery. Here in the Americas region I do expect us to be up above the 1-million mark (in annual sales).”
About Nissan’s production cuts and the China issue:
“On to the China business. It’s no surprise that China’s annual volume of 23-25 million cars, depending on the year, was strongly dominated by joint-venture partners with foreign brands. That has dropped off dramatically during Covid years and after. That’s been driven by domestic Chinese competition being very good. I’ve been there and done a lot of benchmarking work with extremely good products with a highly competitive cost base. They’re much more affordable for the local Chinese customers.
“All joint-venture companies are being resized, not just Nissan. We’re readjusting that business to have a China-for-China strategy working with our joint-venture partner in China to develop local products using local supply base, local technology, local design and making a much more relevant product for the Chinese market. That’s really our China Recovery Program which, yes, we have seen a drop in volume. There will be a down phase and then we will recover because we’ll be doing the right thing in China for the Chinese customer.”
As for the running out of cash question:
“What someone took was a quarterly or monthly cash-burn number and said at this rate of cash burn for that particular snapshot in time if you continue that for the next 12 months you will run out of your net cash…that’s completely flawed math.
“I’m converting yen to U.S. dollars to make it relevant for this discussion. Let’s say we have $9 billon in net cash, that means cash sitting in a bank that you have access to. If you’re burning through $1 billion per month you will run out of cash in nine months. But we’re not burning through $1 billion per month. Our net free cash flow positions for this financial year is zero. So, yes, we’re not generating new free cash, but we’re not eating into the $9 billion. So starting the next financial year, which we will in April, we still have access to $9 billion and we’re generating more free cash flow.
“And the forecast for the next year, subject to performance of the vehicles, is to have positive free cash flow for the following year. Which means you don’t burn through any of the $9 billion and you’re self-sustaining your day-to-day operations and all the capital investments you have to make going forward. This is a huge amount of money, because we’re retuning all these EVs, we’re bringing in new hybrids, we’re bringing in new products, we just launched four new products, so we’re not sitting idle on the product investment standpoint.
“There’s no way we’re going to run out of cash in 12 months. It’s just basic math of looking at the business and publicly available data.
“There’s one additional element. We have a very large financing business, which gives us access to a whole other pool of cash incremental to the $9 billion. If you look at all these numbers, there’s no liquidity crisis whatsoever. Now If Nissan starts publishing numbers on a monthly basis where we have negative free cashflow and we’re burning though $1 billion per month with no recovery plan, then we have a problem. We are not even remotely close to that scenario.”
Nissan paid to fly and house Motor Authority for the launch of the 2025 Armada and 2025 Murano.
